Capitalism automatically adjusts to whatever growth is possible. If our government legislates environmental protections, the Capitalism adjusts accordingly. Supply and Demand. If oil runs out, Supply goes away and prices for scarcity increase. Then Demand will shift to substitutes and Capital will be allocated accordingly to increase Supply in the substitutes. Capitalism is the most efficient and effective allocation mechanism for Capital ever created. Socialism almost always involves price controls, which always creates distortions, black markets, and scarcity. Venezuela currently has a toilet paper shortage, because of their ridiculous price controls. Socialism simply doesn't work in the long run. It creates poverty for the masses very fast and very efficiently, while the ruling class always use their power to enrich themselves. Socialism is by its very nature cronyism, where the ruling class pick and choose who to take money from and who to give it to. With this kind of power, it always devolves to the ruling class taking the lion's share. In Capitalism, the ruling class is generally restrained, because property owners are protected with strong property rights. When governments lurch to the Left and Socialism, then property rights are eroded and cronyism becomes more widespread.
The best economic system by far is Capitalism restrained by government laws and regulations to prevent Tragedy of the Commons, fraud, collusion, cronyism, and monopolistic practices. The gov't should never get involved in price controls. Manipulating the price of money, interest rates and money printing, is the most damaging thing a government can do to a Capitalist economy, because it is a stab in the heart as it has send incorrect pricing signals rippling through every good and service, creating malinvestment, distortions, and other long term impacts that lower growth over the long run. |
